SBA Loans – A Complete Guide

What Are They?

SBA, or Small Business Administration, is a government agency that helps to provide a guarantee to banks and lenders in order to achieve a loan for a business; it is important to note that it is not the agency itself that hands out loans. A loan of this type is helpful for both the bank and the business because if a business defaults on a payment, SBA will step in and pay it instead.

So when a loan is granted through SBA, they aren’t actually given straight from the agency itself, they are commercial loans but with certain SBA guarantees. This can be fantastic for small businesses as they may not qualify for a traditional loan but can still receive funding with the help from the SBA.

Types of Loan

There are a number of different loans available with each one offering something different. For example, if you needed working capital, equipment, refinancing, or revolving funds, the best option would probably be the 7(a) loan program. This tends to be the most common option for small businesses as it covers a number of bases and it provides money to expand on equipment as well as a level of working capital. CAPLine is available to those looking for seasonal working capital as well as export assistance. Furthermore, CDC/504 loans can help a business to fund big purchases such as real estate.

In addition to this, there are also loans available for unexpected events such as a natural disaster. These can be used to repair or replace any items – such as real estate, machinery, equipment, personal items – if they have been damaged by a declared disaster. This type of loan isn’t just for businesses though, they can also be for personal premises and items in the home.

The amount of money you are requesting will also affect what type of loan you apply for. For example, if you require something less than $50,000, the SBA Express program or the Microloan program are the best options. On the other hand, if you needed something larger than that amount these options wouldn’t be available to you. Currently, most small business startups are experiencing the great rates when it comes to fees and they can even be found for nothing for any loan under $150,000.

Choosing a loan seems complicated at first but they are all intended for different purposes and different amounts so as soon as you find the one that matches your description, that should be the one to receive your application.

Can I apply?

If you are unsure as to whether you would qualify for any of these loans, talk to a loan packaging advisor like First Financial discuss your needs and your business. If not, the SBA District Office will also be able to advise and point you in the right direction.

It is important to note that there are other factors in play other than the SBA requirements such as your business’ cash flow, collateral, equity investment, and more.